ATLANTA - Banc One Corp. doesn't own a bank in Georgia, but that hasn't stopped the Columbus, Ohio-based behemoth from operating a bank here. Sort of.

Putting a new spin on a proven performer - supermarket branches - Banc One has installed loan production offices in five Roberds furniture stores in metro Atlanta. The result is a kind of embryonic branch system in a state where Banc One doesn't possess a bank charter.

While limited in scope, the offices provide a powerful tool for capturing a piece of Atlanta's home equity lending market.

"It will take some period of time to determine whether it's a substitute for an actual banking presence in a state," says Charles W. Held, president and interim CEO of Banc One's subsidiary in Dayton, which administers the Atlanta offices. "But we're very pleased with the results so far."

Bank One, Dayton is still debating how far to take the furniture store concept. Under Georgia state banking law, the menu could be expanded beyond home equity loans to other types of consumer credit. Expanding into Florida is also an option, since Roberds operates seven stores in the St. Petersburg/Tampa Bay area.

What has been accomplished so far, however, testifies to Banc One's innovative approach to retail banking. The bank is currently experimenting with branches located in grocery stores, Wal-Mart Super Centers, office buildings, and hospitals.

"They're willing to experiment with novel delivery vehicles," says analyst Nancy Bush, with Brown Brothers Harriman & Co. "They're looking at their retail business in a whole different way."

Ms. Bush also notes that the Roberds franchise provides Banc One "a toehold" in the Southeast, though she doubts that a major acquisition in Georgia or Florida will follow anytime soon. "It does give them an opportunity to look at a Southeast customer base," she says.

Mr. Held begs off answering a question about Banc One's acquiring a major Atlanta bank, saying such strategic issues are the purview of chairman and CEO John B. McCoy.

Banc One is gradually becoming a recognized name in Atlanta. The nation's eighth-largest banking company, with $88 billion of assets, hasn't placed its own signage in front of the Roberds stores. But it does advertise heavily in the local newspaper and blankets the market with direct mail.

A recent print ad promoted a 5.95%, six-month "teaser rate" on a home equity line, which then rises to either 9.95% or 10.95% depending on the amount borrowed. Customers were invited to call or visit Banc One officers at one of the five Roberds locations.

Banc One is also soliciting deposits in Atlanta, piggybacking the effort on the home equity campaign. Customers enticed by certificate of deposit promotions are invited to call a toll-free number in Dayton, since the Atlanta loan production offices cannot accept deposits.

Competitors are well aware of Banc One's presence in Atlanta. "I consider Banc One to be a competitive force, whether it is in Roberds or a free-standing building," says Thomas H. Coley, chairman of SouthTrust Bank of Georgia.

Mr. Coley, who administers 80 Atlanta branches for Birmingham, Ala.- based SouthTrust, envies Banc One for having first shot at affluent furniture buyers. "I don't have a clue as to how much business they're doing" in the Roberds locations, Mr. Coley says. "But I have a gut feeling that, because of the big-ticket items, they're seeing a fair amount."

The Roberds relationship is key to whatever success Banc One has in Atlanta. The bank already runs Roberds' private-label credit card, which finances purchases up to about $3,000. If a customer requires more than $5,000 in credit, a Roberds salesman can direct him around the corner to the Banc One office.

"While you might be willing to charge a couple of thousand on a credit card, you need an equity loan if you're really going to remodel your kitchen," Mr. Held says.

A recent Consumer Bankers Association survey indicated that 22% of home equity customers last year used their loans for home improvement, the largest single category after debt consolidation (30%).

The idea of establishing the loan production offices in Atlanta originated with Mr. Held, a 31-year employee of both Banc One's Dayton bank and a predecessor organization acquired in 1983. He began by looking for ways to enhance Banc One's relationship with Dayton-based Roberds, a key customer for 25 years that operates stores in Ohio, Indiana, Georgia, and Florida.

The initial idea was to finance big-ticket purchases in Roberds, such as furniture, refrigerators, and television sets. Through the Roberds private- label card, Banc One already had half a million card customers in Georgia, most of them in Atlanta.

At the same time, Banc One was looking for another vehicle to expand its fast-growing home equity business. The problem was how to accomplish that without building free-standing branches.

"It seemed like a natural step, where we already had a market presence in credit cards and a good customer here with seven stores, to look at what opportunities existed" with Roberds, Mr. Held says.

Fortunately for Mr. Held, Banc One's decentralized operating style allows for innovative efforts at the subsidiary level. Although executives at the holding company were aware of his activities, the only approval Mr. Held required came from Thomas E. Hoaglin, the chairman of Bank One Ohio Corp. in Columbus.

For assistance in designing the in-store offices, Mr. Held turned to Atlanta-based International Banking Technology, the largest provider of grocery store branching services. IBT recently installed three supermarket offices for Banc One in Dayton.

Unsurprisingly, the Roberds offices look a lot like the Cub Foods branches in Dayton, with pillars, recessed cubicles and back-lighted display boxes. The size ranges from 300 to 750 square feet, just enough to handle two or three customers at a time.

IBT president John Garnett said he believes Banc One is the only bank in the country to use in-store loan production offices to cross state lines. A few other banks, such as First Heritage National Bank of Davis, Okla., and First National Bank of Central Florida, Longwood, have installed similar facilities in Wal-Mart Super Centers, but only within their home states.

"It's a unique situation, in that Banc One is trying to generate loans in a new market," Mr. Garnett says.

Memphis-based National Commerce Bancorp. does operate full-service grocery store branches in Roanoke, Va., and the Raleigh-Durham area of North Carolina, but through a thrift charter based in Knoxville, Tenn.

Mr. Garnett also believes the Banc One model, which is dependent on a close relationship with a retailer, is a difficult one for other banks to emulate. "It wouldn't really bring much to the table from the retailer's perspective, except for generating rent," he says. "The retailer could do a lot more for himself by having a full-service branch inside his store operated by a local bank that could bring customers in."

Mr. Garnett's critique is borne out by Roberds' chairman, president and CEO Kenneth W. Fletcher, who says his company agreed to the arrangement mainly as a favor to Banc One. "I'm not really sure what it does for us. But they're the only bank we've done business with since we've been in business. As a result of that, we decided to do an experiment with them and see how it worked in the market."

Banc One is clearly happy with the results. After opening the first two Roberds locations in February 1994, it introduced a third six months later. Two more followed in January.

Shelly Howard, managing officer of equity lending at the Marietta branch, links growth in the program to the fact that Banc One is one of the few banks in Atlanta to offer a 100% loan-to-value product. With its continuing population influx, metro Atlanta is full of new homeowners who possess little equity in their dwellings and need to go beyond the traditional 80% loan-to-value home equity loan.

Mr. Held says losses on the 100% loan-to-value portfolio mirror those with the 80%, though he won't disclose actual figures. "While I think the risk was originally perceived to be there, the actual results have proven that's not the case," he says.

"The losses and delinquencies have been so small that even if you had a significant uptick, it would be well within the parameters of how we priced the product originally," he adds. "Higher losses and delinquencies could be absorbed."

Mr. Held declines to disclose financial results for the five Atlanta offices. He estimates Banc One's total capital investment was $250,000. He says that is about as much money as Banc One spent for the land alone at a free-standing branch now going up near a Dayton mall.

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